A New Leadership Ethos - The Ability to Predict [Paperback]

Leadership is temporal. During each stage of an organization's life, a different type of leader is needed. No business is "built to last" either, regardless of the popularity of a book by Jim Collins by that same name.

These are just some of the ideas of Dr. Marc van der Erve, a European-educated writer and lecturer who now resides in South Africa. The holder of a BSC in Applied Physics and a Ph.D. in Sociology, van der Erve is the author of A New Leadership Ethos: The Ability to Predict.

Four Types of Leaders

According to Dr. van der Erve, there are four types of leaders: transformers, builders, growers, and confronters. Each is necessary during a specific stage in an organization's life. Transformers "re-invent" an organization by "finding a new platform for growth". Builders develop products and boost revenues to affect a larger environment. Growers repeat an organization's earlier successes with greater efficiency while fostering stable growth. Confronters oppose "established thinking" and entrenched business practices when a "radically changing environment" requires radical adjustments. Such business leaders break traditions, "stop a company from looking inward", and set the stage for a new transformer-type figure.

Marc van der Erve's leadership paradigm, which also characterizes the world's religious traditions and political powers, describes the histories of three well-known technology companies: Apple Computer, Digital Equipment Corporation (DEC), and General Electric (GE). That both Apple and GE have survived and indeed thrived is a testament to the importance of having the right leader for a specific environment. The tale of DEC is a cautionary one.

Apple Computer

During his first stint at Apple, Steve Jobs was the consummate builder. His "platform for growth" rested firmly upon foundational products such as the Apple I and Macintosh computers. Although Apple achieved respectable revenues, Jobs was ousted when the business began to struggle. His successor, John Sculley, was a grower-type leader who optimized Apple's "operational and marketing processes" to repeat the company's earlier financial success. When revenues flattened, however, Sculley "failed to set off another cycle of growth" by botching the development of handheld devices. Sculley's successor, Michael Spindler, was a confronter who cut costs.

Cost-cutting could only take Apple so far, however, and Spindler was soon replaced by a transformer-type leader. Gil Amelio did cut costs even further, but "he also invested in the development of new ideas". Fittingly, he enlisted the help of Steve Jobs, "a builder who excels in identifying and nourishing niches". In taking the reigns from Amelio, Jobs introduced the iMac, the iPod and the iPhone. Apple Computer also began selling music through the Internet as iTunes.

Apple's example is easy to follow, but the stages of leadership aren't always discrete - nor are all its endings happy. Some organizations have enjoyed sweeter outcomes, while others have rotted from within. DEC and GE show how.

Digital Equipment Corporation

Digital Equipment Corporation (DEC) endured a flawed beginning, at least according to Marc van der Erve's model. Ken Olsen, the company's founder, was a grower instead of a builder. Although Olsen grew the company's annual revenues to $13 billion (USD), he put all of DEC's proverbial eggs into one basket: mini-computers. Blind to the possibility of personal computers (PCs), he asserted that "There is no reason for any individual to have a computer in his home".

Gordon Bell, a builder-type leader, was recruited by DEC from MIT. A talented inventor, Bell battled Olsen in a series of "dog fights" that the company's founder ultimately won. DEC, however, lost its chance to build and then grow. Resting on a flawed foundation, its last leader plowed ahead to confrontation. Bob Palmer, a confronter-type president, oversaw DEC's sale to rival Compaq. There would be no transformer-type leader for the now-defunct Digital Equipment Corporation.

General Electric

Unlike DEC's Ken Olsen, GE's Jack Welch was both a builder and a grower. He was a confronter and a transformer, too, as the environment required. After becoming General Electric's CEO in 1981, Welch slashed the company's workforce by 100,000 employees. The confronter wasn't content with cost-cutting, however, and soon became "the driving force behind the improvement of people and processes." Now a transformer, Jack Welch initiated the largest total-quality program in corporate America. In a "ruthless process of natural selection", he also ordered his subordinates to axe underperformers. With a leaner, meaner team in place, Welch invested heavily in the organization's future leaders.

Although most CEOs are content to remain in their comfort zone, Jack Welch was more than a confronter - or even a transformer. When the business environment required a builder, he bought "a record number of companies" with both a "proven track record" and the potential for growth. During the last stage of his GE career, Welch served as a grower-type leader who reaped the reward of what he had sown. In 1981, when Welch became CEO, GE's revenues were $12 billion (USD). In 2001, when he retired, they were $280 billion.

Jack Welch's successor, Jeffrey Immelt, was forced to become a confronter-type leader as economic conditions worsened and GE's growth declined. As Marc van der Erve notes, the "Immelt Revolution" broke with GE's promote-from-within policies. The company's new outward focus included the sale of GE Plastics to SABIC. Whether Jeffery Immelt can rise to the environment's eventual demand for a transformer-type leader remains to be seen.

The Theory of Emzine

"Organizations can rarely be built to last but generally only grown to achieve," writes Dr. Marc van der Erve in A New Leadership Ethos: The Ability to Predict. A student of science and sociology, Dr. van der Erve roots his writings in the deep, rich soils of chaos theory, thermodynamics, and Darwinian evolution. The result, a flowering called "the theory of Emzine", is designed to provide leaders with the ability to repeat organizational successes and foresee the future. This ability to predict - and the wisdom to know when to change course or even step aside - is part of the "moral competence" of leaders.

Beyond Case Studies

Part 1 and Part 2 of this book review examined Marc van der Erve's analysis of four types of business leaders: transformers, builders, growers, and confronters. An analysis of Apple Computer, Digital Equipment Corporation (DEC), and General Electric (GE) afforded three valuable case studies. The third and final part of this book review seeks the heart of A New Leadership Ethos and examines the boldest of van der Erve's claims - the very point captured in the book's title - that the distinguishing characteristic of our time is the ability to predict.

Forms of Organization

Energy, environment, and evolution underlie the Theory of Emzine, a portmanteau of the words "existential manifold" and "zine". Such a naming convention may seem ponderous, but Emzine's tenets are straightforward. "All observable facts", writes Marc van der Erve, "are forms of organization". In other words, everything from atoms to Apple Computer is an organization. Although some organizations (such as markets) require leaders, others (such as layers of liquid) remain leaderless. Yet both types are "behavioral marvels that emerge spontaneously to minimize a state of inequality through the natural selection of the most efficient behavior pattern species - no matter the actors involved".

Atoms and Apple Computer

Like atoms and Apple Computer, heat flow and human organization follow a predictable pattern of inequality, the minimization of inequality, the natural selection of behavioral patterns, and the reproduction of the most efficient patterns. With markets, inequality is a matter of supply and demand. With layers of liquids, the variable is temperature. In each case, the organization's spontaneous attempts to minimize inequality lead to the natural selection of behavior patterns. In Darwinian fashion, the most efficient molecular or human behavior patterns reproduce best, leading the organization to evolve accordingly.

The Ability to Predict

"The ability to predict," continues van der Erve, rests on the observation that behavior patterns emerge in distinct stages" of environment, trigger, behavior-pattern species, and environment-sustained organization. In the case of a business, the environment is "supply-demand inequality", the trigger is "entrepreneurial leadership", the behavior-pattern species is "congruently-working people in multiple roles" and the environment-sustained organization is the business itself. For liquid layers and heat flow, the stages are an environment of temperature inequality, a trigger of surface perturbations, a behavior-pattern species of congruently-moving liquid molecules, and an environment-sustained organization of the heat flow itself.

For readers without a background (or interest) in science, A New Leadership Ethos: The Ability to Predict may seem less accessible than a business book such as Built to Last: Successful Habits of Visionary Leaders by Jim Collins. For the more scientific-minded reader, however, van der Erve's voice is a welcome sound in a business-book market that often seems like an echo chamber.

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This book review was written by Steve Melito and appeared originally on CR4: The Engineer's Place for News and Discussion.

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